Think of the word ‘slavery’, and your mind is likely to conjure up imagery of people in metal shackles forced to work against their will. While it is tempting to believe we can consign such images to a shameful past, slavery continues to be a very real, if sometimes less apparent, stain on modern society.
The United Nations estimates that there are more than 40 million victims of contemporary slavery, with about 25 million exploited through business supply chains. This issue becomes even more complex in developing and underdeveloped countries, where incidents and violations are often either unrecorded or underreported.
Many countries have introduced legislation to address this modern-day slavery, including the UK, EU, the US and Australia.
The Modern Slavery Act [Australia] (2018)
In 2018, Australia strengthened its fight against slavery. The Commonwealth government passed the Modern Slavery Act to help companies take proactive and effective actions to address this menace.
Organisations in Australia with revenues above AUD100 million are now mandated to comply with the Modern Slavery 2018 Act’s reporting requirements, which extend to all their Australian and foreign business entities.
The Act requires organisations to report their structure and operations, map out the risk of slavery in its supply chain, how the organisation has mitigated this risk and the effectiveness of their actions.
Companies that fall outside the mandatory compliance rule can disclose their statements voluntarily, and many choose to do so. By the end of March 2021, most large organisations should have published their modern slavery statement.
However, the pandemic has hampered organisations’ efforts. It was widely acknowledged that the pandemic was likely to lead to a situation in which the heath crisis, coupled with the mounting unemployment rate, would lead to new slavery and worker exploitation cases. There is a serious concern as the International Labour Organisation expects the global unemployment rate to climb by 25 million.
Environmental, Social and Governance
We are well aware of how a company’s performance on the ESG barometer impacts investment and shareholder decisions. Eradicating modern slavery from the supply chain is a critical issue in the Social element of ESG. Yet it is potentially the most inadequately represented indicator.
There have been great debates year-on-year about Environmental and Governance standards, while discussions about the S in ESG usually revolve around community initiatives, diversity and employment. The depth of human rights violations and modern slavery cases are very rarely included in high-profile discussions.
However, there is room for optimism in the actions taken recently by some of the top industry players in the mining and resources industry:
- Last year Glencore joined the Fair Cobalt Alliance (FCA), an organisation that seeks to bring professionalism and safer working practices to artisanal and small-scale mining (ASM). While Glencore does not process, buy or trade cobalt derived from ASM, its own large-scale industrial operations produce cobalt metal within the same region as ASM producers. Glencore states that through its support of the FCA, it supports the efforts of legitimate ASM cooperatives to align their operations with international human rights practices, including the prevention of child labour.
- BHP launched a minimum requirement policy regarding policies and action to prevent slavery for suppliers who wish to do business with them. BHP’s Ethical Supply Chain team runs due diligence on all suppliers.
- Fortescue Metals, South32, Anglo American, INPEX, Gold Fields, CITIC Pacific Mining, Iluka Resources, Western Power, Synergy and ATCO all participated in a pilot programme with Minderoo Foundation (the Walk Free Initiative), which undertakes extensive analysis and publishes an annual Global Slavery Index that allows companies to tap on to its research to validate their initiatives’ effectiveness.
At a global level, the UN Children’s Fund (UNICEF) collaborated with the Global Battery Alliance (GBA) – an organisation of 40 entities that includes Anglo American, Glencore, Vale, Eurasian Resources Group and Trafigura – and raised nearly USD 21 million to launch initiatives to address child labour employment in artisanal mining communities.
Technology is also playing a pivotal role by introducing innovative ways to tackle contemporary slavery. One such initiative is the Responsible Sourcing Blockchain Network (RSBN), powered by IBM Blockchain technology and Linux Foundation’s Hyperledger Fabric.
The objective is to bring greater transparency into the supply chain by bringing companies on board from various sectors including mining, auto, and refining, on a single global ethical mineral sourcing platform. Norilsk Nickel is one of the recent companies to announce its decision to join the RSBN that will allow it to source responsibly and thoroughly audit its supply chain for compliance.
Addressing modern slavery
Over the years, there have been several suggestions to ensure compliance with legislation to address modern-day slavery. These have ranged from having a board member focused solely on this issue and liable for any non-compliance, to disqualifying companies with grey reputations for public procurement contracts.
We would hope the moral and social benefits of addressing modern day slavery are compelling enough, but companies that make efforts in these areas can expect other returns. Industry observers believe companies who proactively address their ESG issues unlock competitive value in improved brand perception, retention of talent, and high performance on ESG investment indices.
Modern slavery is a scourge that needs commitment and global collaboration across industries and sectors to be eradicated. It also requires buy-in from governments, corporates, suppliers, producers, shareholders and investors. Companies can best achieve this by building partnerships to share best practices, knowledge and information.
It is good to see mining companies already playing a leading role in making this happen.
Audrey Lopez – Senior Associate – Research
Find out more about Cygnet’s Environmental, Social and Governance support.
Sources
The Conversation.com; Australia Government Department of Home Affairs; People Culture.com; RCS Global; IM International Mining.com; Australian Mining; Glencore company website; Minderoo website; BHP company website; UNICEF; AntiSlavery.org; Ourworld.unu.edu; Deloitte; ReutersEvents; Themekongclub.org; Baker McKenzie Report; NASDAQ.com
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